Hungarian Prime Minister Péter Magyar told the National Assembly on October 19, 2026, that his government plans to cut income tax on earnings up to the minimum wage from 15 percent to 9 percent. The change is slated to begin January 1, 2027.
The proposal is part of the government’s 2027 budget framework. It still requires parliamentary approval.
Magyar also announced a broader income-tax reduction for monthly pay below 680,000 forints. The budget draft is due before lawmakers later this month.
The planned cut reaches beyond the lowest-paid workers
The government’s announcement describes relief for a wider group than workers at the wage floor. The 9% Income Tax proposal is expected to cut taxes for more than 2 million taxpayers, at a projected cost of 250 billion forints.
| Group | Proposed change | Timing or threshold |
|---|---|---|
| Workers at the wage floor | Rate falls from 15% to 9% | From January 2027; earnings up to the minimum wage |
| Workers below the monthly threshold | Income-tax reduction | Pay below 680,000 forints; about 2.5mn workers |
| Earnings above the wage floor and up to the median | Progressively increasing tax liability | Median gross monthly wage is approximately HUF 625,000 |
| Earnings above the median | 15% rate remains | No change described |
The full monthly minimum wage is HUF 322,800. The budget’s public description uses both the 680,000-forint threshold and the median wage as reference points, while setting out a progressive liability between the wage floor and the median.
That structure remains a proposal, not enacted law. The government has not yet put the draft before parliament.
The deficit plan relies on savings and new levies
The government is targeting a 2027 deficit of 4.9 percent of GDP, compared with an estimated 7.5 percent in 2026. Analysts had expected a 5.3 percent deficit in a poll conducted the previous week.
The fiscal target comes alongside approximately 2.1 trillion forints in additional spending and tax relief. The government says it can create fiscal room equal to around 4% of GDP through spending cuts, the end of one-off pre-election outlays, lower interest costs and new taxes.
Of that room, 1.4 percentage points would pay for higher household support, public-sector wages and healthcare. Another 2.6 points would go toward reducing the deficit. The government also expects to save 1.5 trillion forints, or 4.63 billion dollars, in 2027 by cutting administrative costs, dropping inefficient spending and reviewing public contracts. A HUF300bn contingency reserve is planned.
New revenue measures include a wealth tax expected to raise 200 billion forints, about 618 million dollars, each year. It would apply to people with assets exceeding 1 billion forints, affecting 15,000 people.
Large companies would also face a higher rate. Firms with annual revenue above 180 billion forints, about 556 million dollars, are expected to pay 11% rather than the current 9% corporate tax rate. The advertising tax would rise from 0% to 3.75% in 2027, generating more than HUF14bn annually from media companies and global technology firms such as Google. The package also counts 246 billion HUF in concession fees.
The package also funds families, pensions and public services
Family allowances would double next year, benefiting more than one million families with about 1.6 million children. That change alone adds HUF300bn to the budget burden.
The minimum pension would rise from 28,500 HUF to 120,000 HUF. The government plans to retain the 13th-month pension and pay the first weekly instalment of a 14th-month pension. The 13th-month payment reaches about 2.5mn people, while pension increases and benefit changes together cost nearly 450 billion forints. A leisure card for all pensioners is to be phased in by 2030.
Public-sector pay increases would receive 677 billion HUF and cover more than 600,000 public servants. The proposed increases are 17% for healthcare workers, 17.8% for social-services employees and 15% for law enforcement. Another 510 billion HUF would go to healthcare, with the government saying the added investment would move spending closer to the EU average.
Local-government budgets would increase by 64 billion forints, while the solidarity contribution would fall by 62 billion. A separate 100-billion-HUF program would pay for road maintenance and pothole repairs.
The proposal also narrows a tax exemption for mothers. It sets a monthly gross-income cap of HUF1mn and would not extend the exemption to mothers over 40 with two children. Existing exemptions for people under 25 would remain.
The draft goes to parliament after fiscal review
Magyar called the plan “the budget of justice and progress, the budget for the reconstruction of Hungary.” He also described it as “the first budget since the change of regime” intended to transform entire systems.
He accused the previous government of leaving behind “a worn-out, demolished, devastated, and looted country.” Magyar said the previous administration adopted the 2026 budget with a 3.7 percent deficit, but that the real shortfall would have reached 8.3 percent without his government’s decision to stop public funds and bring home EU resources. He also accused the previous government of launching the mothers’ tax scheme “without securing enough funds.”
MEP Balázs Orbán of FIDESZ attacked the proposed restriction on mothers’ exemptions. On X on October 19, 2026, he wrote: “Péter Magyar to abolish tax exemptions for Hungarian mothers from January, on orders from Brussels! Hungarian families will pay the price!” He said the law had promised full income-tax exemptions to all mothers with two children, regardless of age.
The government will send the draft to the Fiscal Council, also known as the Budget Office, this week. The body has no veto power. The proposal is then due before the National Assembly at the end of the month.
The tax plan had been a Tisza party commitment before the budget announcement. István Kapitány, who is due to take charge of the economy and energy after Tisza takes over, said in April 2026 that lowering tax on earnings at the wage floor to 9% would be among the first steps. Under the current system, personal income tax is 15%, employees pay an 18.5% social-security contribution and employers pay a 13% social-contribution tax.
Hungary’s euro-adoption ambition has accompanied a rise in the forint, which stood at a four-week high on Monday. Inflation had fallen below the central bank’s target, and bond yields were among the lowest in central Europe; analysts have discussed euro adoption in 2032 or 2033. The cited exchange rate was $1 = 323.4500 forints.
